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Thursday, July 05, 2007

The Referendum Debate

Well this debate rumbles on. Today Hungarian Prime Minister Ferenc Gyurcsány warns that if the referendum were held and the opposition view of Fidesz and the Christian Democrats (KDNP) won, then the lost budget revenues would need to be compensated either by withdrawing money from other areas or via tax and contribution hikes.

Let us remember the key issues are these:

The court said three questions asking whether Hungarians agree to revoke as of Jan 1 co-payments for doctor's visits, hospital stays and tuition fees at state universities can be put to a referendum.

This debate has started to warm up during the very week that Standard & Poor's argue that Poland, Hungary, the Czech Republic and Slovakia are suffering from reform fatigue:

None of the four Central European EU countries feels enthusiastic about continuing budget consolidation, as the political atmosphere is hostile and the population is exhausted by reforms. “Political unwillingness or inability to tackle structural reforms and further consolidate public finances could limit improvements in credit quality of the four largest Central and Eastern European countries (the CEE-4),” Standard & Poor's analysts wrote in a report titled “Reform Fatigue Clouds A Brighter Outlook For Central European Sovereign Ratings.”

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